INTRODUCTION
166. In this chapter, the Commission has analyzed the Aggregate Revenue Requirement filed by the Licensees in the light of the objections/ suggestions raised by various persons in writing and during public hearings on revenue requirement and determined the Aggregate Revenue Requirement for FY 2013-14.
AGGREGATE REVENUE REQUIREMENT (ARR)
167. The Aggregate Revenue Requirement (ARR) (the revenue required to meet the supply cost, for the supply of the forecasted sales volume) has been estimated and filed by the Licensees for FY 2013-14 at ` 49187.45 Crs. The details of the estimated revenue requirement as filed by the Licensees are given in Table 27.
Table 27 : Revenue Requirement as per Filings for FY 2013-14 (```` Crs.)
Licensee ARR/Cost Item CPDCL EPDCL NPDCL SPDCL All Licensees (1) (2) (3) (4) (5) (6) Distribution 1699.70 809.79 890.88 1273.30 4673.67 Power Purchase 17927.82 7767.89 5690.30 10752.37 42138.40 Transmission 649.53 228.35 222.85 325.09 1425.83 SLDC Charges 19.18 6.74 6.58 9.60 42.11 PGCIL Charges 199.44 68.41 68.72 96.43 433.00 ULDC Charges 12.52 4.29 4.31 6.05 27.18 Interest on Consumer Security 194.98 76.87 48.60 86.16 406.62 Supply Margin 11.69 5.62 7.23 15.38 39.92 Other expenses 0.00 0.15 0.58 0.00 0.73 Revenue Requirement 20714.87 8968.13 6940.06 12564.40 49187.45
OBJECTIONS /SUGGESTIONS ON REVENUE REQUIREMENT
168. Objections/Suggestions regarding Bank Interests: Association for Development of Electronics Complex questioned, whether the Bank interests are also added in the estimations. Bank interests on bad debts are the DISCOMs inefficiency hence they have to be borne by DISCOMs only.
Licensee’s Response: The Distribution cost as approved in the MYT tariff order 2009-10 to 2013-14 approved by APERC are considered in the ARR of the FY 2013-14.
Commission’s View: The distribution cost approved by the Commission in the MYT order for 2009-10 to 2013-14 includes the element of bank interest. No interests on bad debts are included in MYT order.
169. Objections/Suggestions regarding Finance Short-Term Power Purchase: Sri. Gali Muddu Krishnama Naidu, M.L.A, Sri. M. Narasimhulu, M.L.A, Sri. R. Prakash Reddy, M.L.A & others have stated that, the Licensees are indulging power purchase at higher cost and supplying the same to agriculture and Industry incurring a burden of ` 3-10 per unit. The higher power purchase cost has led to accumulation of debt to the tune of ` 23,245 Crs. with the Discom. This reflects the inability of GoAP in handling the DISCOMs and suggested for improvement in professional management of DISCOMs without the political intervention.
Licensee’s Response: Due to increase in demand and non availability of energy from hydel stations, DISCOMs were constrained to procure the power from short term sources through transparent tender procedure. The effort was to lessen the demand supply gap to the extent possible.
Commission’s View: The accumulation of debt with the DISCOMs will be examined when they file the petition for true-up of expenses for completed financial years as per the Regulations.
170. Objections/Suggestions regarding payment of interest on CSD: M/s AP Spinning Mills Association & others have raised an objection with regard to, Interest on Security Deposit has to be paid at 9% instead of @6%.
Licensee’s Response: Instructions were already issued to pay interest on consumer security deposits @9.5% per annum (as per the revised rate of interest notified by the Reserve Bank of India) from 14th February, 2012 onwards till 31st March 2012 by adjusting the same in the future.
Commission’s View: Commission is happy to note that the Licensees are abiding by the Commission’s directions and RBI policy, which at the present is resulting in the consumers receiving 0.5% more than the percentage sought above by the objector.
171. Objections/Suggestions regarding Deviations in Distribution Cost: M/s AP Ferro Alloys Association & others, have stated that, the deviations should be approved and gains and losses should be shared with the consumers on a yearly basis.
Licensee’s Response: The Licensee will consider the Distribution cost which is approved in the MYT Tariff order 2009-14 throughout the control period. However, the deviations from the approved Distribution cost will be filed in True ups as per the Regulation 4/2005 at the end of control period.
Commission’s View: The Commission will take up true-up mechanism after the completion of the control period as envisaged in the relevant regulations. 172. Objections/Suggestions regarding True-up mechanism : M/s AP Ferro Alloys
Producers’ Association & others have raised an objection that, the truing up for the years up to FY 2011-12 should be carried out along with the ARR and tariff determination for the financial year 2013-14. The Commission should conduct a comprehensive true-up exercise in respect of all financial years up to FY 2011-12 without any delay and its effect should be passed in tariff order for FY 2013-14.
Licensee’s Response: The True-ups petition for the years from the years 2006-07 to 2008-09 are already submitted to Hon’ble Commission for sharing of Gains/Losses to consumers as per Regulation 4 of 2005. The True-up petition for the years 2009-10 to 2011-12 will be submitted to the Hon’ble Commission after the end of the second control period 2009-10 to 2013-14 as per regulation 4 of 2005.
Commission’s View: The Commission will take up true-up mechanism for FY 2009-10 to FY 2011-12 at the end of the current control period as envisaged in Regulation No.4 of 2005.
173. Objections/Suggestions regarding True-up mechanism: The net deficit/surplus is notified in the ARR proposals (form 9) under Para 3.17.1 for the years from 2008-09 to 2013-14. These are ARR estimates, but where as whether true-up exercise is done year on to year and the deficit carried forward to the next year is not noted. This indicates that these estimates are projected merely to enhance the tariff rates for the convenience of the
licensee and the government, but not to serve the consumers based on cost of service model or otherwise.
Licensee’s Response: True-up proposals will be submitted.
Commission’s View: Since the retail tariffs during the current control period are being determined on year on year basis, the historical information furnished in the format of form 9 of the filings have no effect on the fixation of retail tariff rates in the tariff order for FY 2013-14. However, the Commission will take up true-up mechanism for FY 2009-10 to FY 2011-12 at the end of the current control period as envisaged in Regulation No.4 of 2005.
174. Objections/Suggestions regarding Security Deposit: Sri. Meesala Basava Punnaih, M/s Repalle Consumers’ Counsil & others have raised an objection that, the collection of 3 months consumption charges in the name of Security Deposit is not correct and appealed to collect 2 months consumption charges as Security Deposit.
Licensee’s Response: As per the clause 4 of “Regulation No.6 of 2004” of the Hon’ble APERC, all the LT consumers shall at all times maintain with the licensee an amount equivalent to consumption charges (i.e., demand/fixed charges and energy charges etc., as applicable) of three months wherever bi- monthly billing is in vogue and two months’ charges in the case of monthly billing cycle, as security.
Commission’s View: As per the existing regulation, the LT consumers shall have to maintain an amount equivalent to consumption charges for three months, wherever bi monthly billing is in practice and two months of consumption charges wherever monthly billing is in place. The Commission directs the licensees that the above regulation has to be followed strictly. If due to any reason, if the billing pattern is changed from bi-monthly to monthly for LT consumers, the licensees can retain security deposit to the extent of two months’ consumption charges only and refund, by adjustment in future bills, any amounts in excess of what has been prescribed in the regulation.
COMMISSION ANALYSIS OF REVENUE REQUIREMENT POWER PURCHASE COST
175. The Commission has conducted a detailed analysis of power purchase cost for FY 2013-14 in Chapter-IV and determined the power purchase cost for each licensee for FY 2013-14. The summary is reproduced in Table 28.
Table 28 : Power Purchase Cost for FY 2013-14 (` ` ` ` Crs.)
Licensee
Power Purchase Cost CPDCL EPDCL NPDCL SPDCL TOTAL
(1) (2) (3) (4) (5) (6)
Filed by Licensee(s) 17927.82 7767.89 5690.30 10752.37 42138.40 Approved by the Commission 15129.47 5786.43 4604.24 8106.46 33626.59
PGCIL AND ULDC EXPENSES
176. The Commission has found that the cost estimated for PGCIL services (inter State transmission charges to be paid by licensees in connection with the power evacuation from central generating stations) are on high side. The costs were revised downwards in keeping with the guidelines issued to licensees. As per this computation, the charges payable to PGCIL are lower by
`13 Cr. The details are given in Table 29.
Table 29 : PGCIL and ULDC Cost for FY 2013-14 (````Cr.) Licensee
PGCIL and ULDC Cost CPDCL EPDCL NPDCL SPDCL TOTAL
(1) (2) (3) (4) (5) (6)
Filed by Licensee(s) 211.96 72.75 73.03 102.48 460.18 Approved by the Commission 208.28 66.44 71.76 100.70 447.18
INTEREST ON CONSUMER SECURITY DEPOSITS
177. The Commission has observed that the cost estimated for interest on consumer security deposit (to be paid by Licensees to the consumers on the consumption deposits of consumers held by Licensees) is on higher side. This cost item is revised downwards after due verification with the annual accounts of Licensees of FY 2011-12. The revised interest cost on consumer security deposits is assessed at ` 383.48 Crs., which is lower (by `23.14 Crs.) compared with the filing estimate of `406.62 Crs. The details are given in Other Costs. (Table 30)
Table 30 : Interest on Consumer Security Deposit for FY 2013-14 (`` ``Crs.) Licensee
Interest on C.S.D CPDCL EPDCL NPDCL SPDCL TOTAL
(1) (2) (3) (4) (5) (6)
Filed by Licensee(s) 194.98 76.87 48.60 86.16 406.62 Approved by the Commission 180.37 70.98 41.47 90.67 383.48
OTHER COSTS
178. All other costs are approved by the Commission as per the filings made by the Licensees as these costs are as per the approval given by the Commission for FY 2013-14 as per the MYT regulatory framework.
REVENUE REQUIREMENT FOR FY 2013-14
179. In the light of the above analysis, the Commission has determined the revenue requirement for FY 2013-14 at ` 40639.50 Crs., which is lower ( by
` 8547.95 Crs.) compared with ` 49187.45 Crs. revenue requirement filed by the Licensees. The details of Commission approved revenue requirement for FY 2013-14 are given in Table 31.
Table 31 : APERC Approved Requirement for FY 2013-14 (` ` ` ` Crs.) Licensee ARR/Cost Item CPDCL EPDCL NPDCL SPDCL TOTAL (1) (2) (3) (4) (5) (6) Distribution 1699.70 809.79 890.88 1273.30 4673.67 Power Purchase 15129.47 5786.43 4604.24 8106.46 33626.60 Transmission 649.53 228.35 222.85 325.09 1425.82 SLDC Charges 19.18 6.74 6.58 9.60 42.11 PGCIL Charges 195.76 62.15 67.45 94.65 420.00 ULDC Charges 12.52 4.29 4.31 6.05 27.18 Interest on Consumer Security Deposits 180.37 70.98 41.47 90.67 383.48 Supply Margin 11.69 5.62 7.23 15.38 39.92 Others expenses 0.15 0.00 0.58 0.00 0.73 Revenue Requirement 17898.36 6974.35 5845.59 9921.20 40639.50